Navigating the Maze of Health Insurance
Everything I learned about health plans, money-saving hacks and why it can be smart to go out-of-network.
Dear Reader,
For the past two weeks, the place holder title for this article has been, “HEALTH INSURANCE SUCKS,” which seemed appropriate and to the point. Then again, I didn’t just spend 30+ non-billable hours researching and writing this post just to express my outrage at the US healthcare system and rant about insurance as the biggest racket of all time.
When I get this fired up, it only makes me more determined to figure out a solution for all of us. In this case, it meant finding ways to succeed within the system, albeit one that is majorly flawed and not designed in our favor. Understanding the intricacies of the health insurance system is unnecessarily challenging yet critically important.
If managing your healthcare feels like playing a complex chess game, but your ability lies on a checkerboard level, you’ll consistently find yourself outmaneuvered.
In the best-case scenario, you might overpay and underutilize your benefits or remain unaware of alternative resources. In the worst-case scenario, you could be without essential coverage, depriving you of access to critical care and potentially leading to financial distress.
PSA: Enrollment period ends on Jan 31 for most of us (unless you have a qualifying event). To prepare you, I did as much reconnaissance as I could to decipher the plan options, share valuable insights on how to structure your coverage and allocate your dollars before the deadline.
xoCelia
Sorry for the fire drill. I started this mission for me, then got 100 DMs asking for help so I consolidated all my findings here. Regardless if you are changing your plan this year, it’s critical to understand your options. I kept this post FREE so everyone could benefit from what I learned but it was a beast of an assignment. Please share and consider upgrading to paid so I can continue to do deep dives on important subjects. Grateful for the support.
On January 1st of this year, I got a bill from Blue Shield for my Silver PPO premium (as a sole proprietor). It was for $903.85 (up $130 from 2023) and it promptly sent me into a spiral. Was I really going to spend over $10K on health insurance when I didn’t even get a cold last year?
Add to that the thousands that I pay out-of-pocket — for products and services that actually contribute to preventing chronic disease — and the grand total was staggering. While I’m aware that my elective spending comes from a place of privilege, it made me wonder if I could be doing a better job managing my health strategy.
Not having coverage in the US isn’t an option. It’s actually required by law to have health insurance in California or be fined with a tax penalty on your state tax return.
When you factor in the precarious state of health and the soaring cost of care in this country, it becomes evident that having health insurance still may not shield a family from financial ruin in the event of a disaster. This is infuriating, especially when most first world countries have single-payer healthcare systems financed by taxes.
The estimated total medical debt across the U.S. is $195 billion. 500,000 families per year experience medical bankruptcy due to unpaid medical bills.
So what’s the solution? Try to stay healthy and learn to expertly navigate healthcare coverage to serve you better.
DEFINITIONS OF KEY TERMS
Let’s start with easy explanations of the terms of your plan.
Monthly Premium
Like a monthly subscription fee for health coverage, allowing you to have access to medical services (that you still have to pay for in some way, depending on your plan and/or choice of provider)
Medical Deductible
Your healthcare savings milestone. It’s the total amount of your out-of-pocket spend for medical expenses before your insurance kicks in.
Typical qualified expenses: doctor visits, hospital stays, surgery, prescription meds
Out-of-Pocket Maximum
Think of this number as the total amount you’ll have to personally cover for medical expenses, kind of like a safety net that caps your spend. Once you reach it, your insurance plan pays 100% of your allowed amount.
Your medical deductible (all of your qualified out-of-pocket expenses) and co-pays contribute to this maximum limit.
Co-Pay
This expense refers to the small fixed amount you will contribute for each medical service.
Summary of Benefits and Coverage
This is your healthcare menu, providing a concise breakdown of your insurance plan’s key features, costs and coverage details. Understand what you are getting BEFORE you make a choice about your plan.
TYPES OF INSURANCE PLANS
A simple summary of the most common plans.
Preferred Provider Organization (PPO)
Plans that offer flexibility to see both in-network and out-of-network providers; allow you to choose a specialist without a referral
If you like VIP status and value having control and choice in providers
Health Maintenance Organization (HMO)
Plans that center around your primary care doctor who coordinates your care within a network; promote preventive services; require a referral for specialists
If you like a comprehensive and collaborative approach to your health
High Deductible Health Plan (HDHP)
Plans that feature lower premiums and a higher deductible to encourage cost-conscious decisions while offering potential benefits from a HSA
If you have low medical expenses and want to be eligible for tax benefits from long-term health savings
Note: All plans include coverage of preventative care (without having to meet a deductible) such as annual wellness exams (and basic bloodwork), mammograms, colorectal cancer screenings, alcohol misuse counseling and more. Full lists here for adults and women so take advantage of what is included.
TAX ADVANTAGED HEALTH SPENDING ACCOUNTS
Below the differences between accounts and some hacks to maximize the benefits.
Flexible Spending Account (FSA)
An employer sponsored account that allows you to set aside pre-tax dollars for medical expenses. Note: it does not follow you if you leave your job (or get fired) or roll over annually so, “use it or lose it.”
Hack: FSA’s are pre-funded by your employer so the total amount is available to you on Day 1 of your plan. You slowly “pay it back” with tax-free deductions from your payroll. Don’t wait until the end of the year, spend it ASAP.
Health Savings Account (HSA)
A consumer-directed account that is funded with pre-tax dollars but requires having a high-deductible health plan (HDHP). It offers more flexibility and allows you to roll over funds year after year.
Hack: HSA’s are triple tax advantaged meaning contributions are pre-tax (lowering your gross income), capital gains are tax free (if you invest the funds) and withdrawals are tax free if used on eligible expenses, which don’t expire. The ultimate flex is using your HSA like a second 401K by keeping your receipts for future reimbursement and letting the funds grow tax free until you retire.
How to Open your FSA/HSA
Whether you are an employer or an individual, you can set up and manage your accounts via Health Equity.
FSA - you should sign up through your employer if they offer it
HSA - you set up your account once you qualify by subscribing to a HDHP plan (the total HSA amount for 2024 is $4150)
Where to Spend your FSA/HSA
Both of these health spending accounts are meant for medical related expenses which up until now mostly meant doctor bills, prescription medication and necessary items like sunscreen or condoms. See full list here.
TrueMed is an incredible start-up that allows you to use pre-tax dollars to pay for products and services that keep you healthy. All of my favorite brands are accepting payment through TrueMed including:
supplements: Thesis, Timeline Nutrition
fitness memberships: Equinox, NY Pilates
meal delivery: Sakara Life, Daily Harvest
saunas and cold plunges: Higher Dose, Plunge
Note: You save money by using tax-free dollars in your FSA/HSA accounts on brands you love. Brands who offer FSA/HSA at checkout could experience up to 36% higher AOVs and 42% lift in retention (according to TrueMed). Win-win.
PREMIUM OUT-OF-NETWORK OFFERINGS
The landscape of health services is evolving to provide excellent care that is offered out-of-network. There are times when stepping away from the insurance system and paying out-of-pocket is worth it. Focus on the value of the expertise, level of care provided and where your dollars are actually going (to insurance or the provider).
Specialist Physicians
We often vilify the physician who chooses not to accept insurance without understanding how that choice affects you and them. Firstly, many doctors feel constrained in the traditional healthcare system which dictates short appointments (15-30 minutes) or limited treatment plans because of its rigid diagnostic and compensation structure.
From an administrative perspective, accepting insurance is a billing nightmare and most practices need to outsource this service which is expensive and time consuming.
Example: Dr Stephanie Colantonio, MD offers conventional medicine paired with holistic healing and a special focus on reproductive and hormone health. In addition to her 11 years of medical education, she pursued various certifications and trainings in psychedelic assisted therapy, mindfulness meditation, and herbalism to greatly expand her skillset and knowledge base for her patients.
Consider: Clearly there is tremendous value in her services that exceeds standard care yet it would be impossible for her to provide this holistic approach or be appropriately compensated within the system. By comparison her initial consultations are 1-2 hours and she is able to offer a holistic plan that includes a range of modalities to treat both physical and mental concerns.
Telemedicine Providers
To fill the gap left between in-network traditional medicine and out-of-network functional doctors, there have been some telemedicine providers that have stepped in to provide essential and specialized services such as advanced labs, hormone prescriptions and supplements, which do not require physical appointments.
Example: Joi Women’s Wellness and Blokes are providers that focus on menopause care, weight loss, sexual health and longevity. They can give patients access to clinical support and affordable diagnostic testing with the added benefit of in-depth, informative analysis of bloodwork with actionable next steps that include supplementation or other science-based therapies. What is the point of getting your labwork covered by insurance if no one is helping you decipher the results in a meaningful way?
Consider: Telemedicine providers negotiate discounted rates for labs (which can be grossly inflated through insurance) and pass along the savings to you. Fees can instead be allocated to improving the patient experience and providing ongoing support in the treatment of many conditions. Additionally many conventional doctors simply do not have the time for continuing education around menopause and aging so this model of wellness care is proving to be very effective and readily accessible. FSA/HSA eligible! New patients can use CELIA15 for 15% off Joi/Blokes labs, supplements or therapies like hormones and peptides.
AUDIT YOUR HEALTH CARE NEEDS & SPENDING
Understand your unique situation and where you invest your dollars so you can construct the strategy that works for you
1/ Determine your health care needs
Are you managing a chronic illness and have repeated visits to a specialist?
Is your focus on preventative care only with your primary care?
Are your providers in-network or out-of-network and do not take insurance?
Do you use alternative practitioners who do not take insurance or aren't covered by your plan? (naturopath, acupuncturist, chiropractor)
Do you want insurance for an emergency?
2/ Review your budget
Based on your income, is it preferable to have a high premium with lower deductible or a lower premium with a higher deductible? You should cross reference this with your health care needs to see what costs you could incur.
Do you need to be reimbursed for health expenses immediately?
3/ Identify your health related expenses
How much do you spend on conventional medical expenses such as office visits, procedures and medications?
How much do you spend on preventative diet and lifestyle products and services such as supplements, meal plans and fitness classes?
3 EXAMPLES OF INDIVIDUAL HEALTH PLANS
To illustrate how you might construct your health strategy balancing in-network and additional expenses, here are three plans based on hypothetical profiles. Note these are CA market plans as provided by my health insurance broker Tim Peterson.
#1: Individual with no chronic illness, in their 30’s who just needs annual wellness visits and preventative care (such as bloodwork)
Option: Blue Shield Bronze PPO
a decent plan that covers all preventative care
#2: Individual who wants primary care and basic coverage for emergencies but prefers alternative practitioners who don’t take insurance (naturopath, acupuncturist, chiropractor) and willing to pay out-of-pocket.
Option: Kaiser Bronze HMO
keeps monthly premium low so funds can be reallocated to out-of-network providers
#3 Individual with chronic illness, in their 40’s who wants to choose their doctors, has scheduled regular visits/procedures and prescription medication.
Option: Blue Shield Silver 70 PPO
a premium plan that allows for cost-effective regular care as you only need to meet the deductible for hospitals, everything else are co-pays
MY NEW PLAN
Based on this extensive research and my specific needs, I decided to switch plans.
Me: Individual who wants to keep my in-network OBGYN, has no chronic illness or need for medication or any procedures outside of covered preventative care, willing to pay out-of-pocket for specialist providers (advanced labs, chiropractic, acupuncture) and for healthy products and services
Choice: Blue Shield Bronze HDHP PPO
lowers my monthly premium by $131
allows me to fund HSA to use pre-tax dollars to save money on all my products and services (supplements, fitness classes and meal plans)
allows me to invest my HSA dollars (in low cost funds) to grow tax free until retirement
allows me to take $4150 off my gross income for 2024 (federal income tax)
*note that I am not a licensed health insurance broker nor a financial planner so please discuss with your people or my CA only broker. This does not constitute any kind of financial advice.
The take-away: Don’t spend more time researching your summer vacation than you do building a strategy to stay healthy, which includes selecting your health insurance, partnering with your doctor, investing your dollars into products and services that promote wellness and staying informed. It’s not hyperbole to say your life depends on it.
All writing is for informational and entertainment purposes only and is not a substitute for medical advice, diagnosis or treatment.
Celia, This is fantastic! Thank you so much for consolidating a veritable maze of information into an easily palatable post. Healthcare and Insurance should NOT be this difficult. Your post is immensely helpful.
Wow! This is amazing Celia. Thank you for all the time and effort you put into this. Such valuable info. 👏🏼👏🏼👏🏼